There has been great excitement about the recent
breakthroughs in MEMS and Nanotechnology. The natural question many people
have had is how to make money on these exciting new technologies.

The first word should be caution. While there is a
great amount of excitement about MEMS and Nanotechnology breakthroughs, there
can be significant barriers to achieving commercial success. These fields have
been plagued by extensive hype, and with many of the research breakthroughs
never successfully making it to successful commercial products.

With this said, it is doubtless that there will be
significant opportunities in the MEMS and Nanotechnology that do effectively
transition from research to commercial products.

A potential investor should realize that many of the
successful MEMS and Nanotechnology commercialization efforts will occur at
large, established commercial high tech companies. These companies have
the significant infrastructure, resources, and marketing organization necessary
to bring a new product to market. The challenge is that in many cases, the
new MEMS or Nanotechnology would be a small part of the overall company, so the
investor is not able to get much leverage when investing in the large company.
The risk can be lower but the potential reward can be modest.

Pre-IPO smaller companies can be highly leveraged to MEMS and
Nanotechnology, but the risks of investing in this sector can be very large.
During the telecom bubble, there were some examples of small companies
being very successful in rewarding investors, but since the collapse of the
telecom bubble, many of these companies have actually gone out of business.
Investment in small companies and possibly new companies focused on MEMS and
nanotechnology can offer significant upside potential if the right company is
chosen.

In considering an investment three key issues must be
considered: Market, Technology, and Intellectual Property.

Market: The key issue is
market potential. Investors should be wary of a new technology that offers
the promise of revolutionizing a broad set of applications. The key
question is what is the one "killer" application that will make the technology,
and hence investment, successful.

Technology: A potential
investor should be aware that there are significant barriers to taking a
technology from a research and prototyping stage to a successful commercial
product. The resources required for making this transition can be
significant, and beyond the scope of what many small companies can achieve.
The easy things can turn out to be hard, and hard things can turn out to be
impossible. A potential investor must have significant domain level
expertise in order to accurately gauge the technical risk of a potential
investment.

Intellectual Property: A
potential investor must also consider the strength of the Intellectual property
portfolio of the company that is being considered. One must consider the
question of what happens if the company has a large potential market, and can
overcome the technical barriers . . . how hard would it be for someone else to
duplicate the product. Simply having a patent in the area means little,
one must consider how much protection the patent affords, and what other similar
patents might exist.

The high potential investment would be one with large Market
Opportunity, very low technical risk, and a robust Intellectual Property
porfolio.